Data released today on the number of unemployment insurance claims for the week ending February 15 and January inflation data are positives for the housing sector.
- Job stability continues to improve in 2014. Initial claims for unemployment insurance in the week ending February 15 totaled 336,000, a decrease of 3,000 claims from the previous week’s unrevised figures. Claims have been trending down since 2012 and the direction in 2014 appears to be headed further downward. On a year-to-date basis, the average number of claims filed in 2014 is lower than that in 2012-2013.
- Inflation remains subdued. In January, overall prices rose 1.6 percent from a year ago. Prices of most commodities rose modestly while the shelter index was up at 2.6 percent compared to a year ago on account of higher rents. Higher rents make homeownership a more attractive option. A low overall inflation rate will also preserve household income. A low inflation rate will also keep interest/mortgage rates low for the time being.
- What this means for REALTORS®: The economy is off to a good start in 2014. Jobs are holding steady and the unemployment rate is trending down. The tame inflation rate will keep interest rates low for the time being. Under the current favorable conditions, NAR forecasts about 5.1 million sales of existing homes in 2014.